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TMI Blog1936 (11) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... r ? (2) If the partnership be so chargeable, are the shares of the partners to be included in the assessment upon the family under Section 25-A(2) ? Messrs. Mittar Chand Lakhmi Dass of Rawalpindi contested their assessment for the year 1935-36 which had been made by the Income Tax Officer on the basis of their income during the accounting period from April 13, 1934 to the April 13, 1935. It a ppears that Mitter Chand and his three sons, Lakhmi Das, Mangal Sain and Chanan Mal, constituted a Hindu undivided family and carried on business as Produce Merchants in the name of Mitter Chand Lakhmi Dass. They also owned a family residential house. Their income was assessed to Income Tax as on a joint Hindu family. On February 7, 1935 ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members of such family, the Income Tax Officer shall make such inquiry thereinto as he may think fit, and if he is satisfied that a separation of the members of the family has taken place and that the joint family property has been partitioner among the various members or groups of members in definite portions, he shall record an order to that effect. Provided that no such order shall be recorded until notices of the inquiry have been served on all the members of the family. (2) Where such an order has been passed, the Income Tax Officer shall make an assessment of the total income received by or on behalf of the joint family as such, as of no separation or partit ion had taken place, and each member or group of members shall in addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness, profession or vocation throughout the previous year, and as if he had received the whole of the profits for that year. Section 25-A and 26 in their present form were enacted in 1928. Previously there was no section corresponding to the Section 25-A but Section 26 read as follows :- Where any change occurs in the constitution of a firm or where any person has succeeded to any business, profession or vocation the assessment shall be made on the firm as constituted, or on the person engaged in the business, profession or vocation as the case may be, at the time of the making of the assessment. It is conceded at the bar that this section as now enacted has merely clarified the legal position as it existed previous to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previously carried on by any other person then legally no assessment canbe made on it in advance because there is no accounting period the income whereof can be taken as a guide for the assessment. In the case of an entirely new business started by a newly constituted firm, no assessment, it is conceded, can be made during the first year. It is during the second year that an assessment can be made on the basis of the income of the first year. Section 26, therefore, applies to the case of a business which was done during the previous year but which has been continued during the year of assessment by different persons. Sub-section (1) applies to firms and sub-section (2) applies to persons and not to firms, but the same principle runs throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain, in my opinion, makes no difference because the business which was carried on by a joint family is now continued by a firm which has been newly constituted and the requirements of Section 26 have been fulfilled. The two facts mentioned above therefore are no ground for distinguishing this case from the case decided by the Division Bench. I would, therefore, answer the first question in the affirmative and the second in the negative and would direct the Commissioner to pay the costs of the assessee of his reference which I would fix at ₹ 75 and would further direct the Commissioner to refund the deposit of ₹ 100 to the assessee. MONROE, J. - I agree. ABDUL RASHID, J. - I agree. Reference answered accordingly. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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